what is meant by GST? state is any three key features
Answers
GST stands for "Goods and Services Tax", and is proposed to be a comprehensive indirect tax levy on the manufacture, sale and consumption of goods as well as services at the national level. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments.
4 Key Features of GST (Goods and Service Tax)
- Single Indirect Tax. GST has been introduced as a single, unified tax reform. ...
- Single Indirect Tax. GST has been introduced as a single, unified tax reform. ...Input Tax Credit System. One of the most prominent GST features in India is the input tax credit. ...
- Single Indirect Tax. GST has been introduced as a single, unified tax reform. ...Input Tax Credit System. One of the most prominent GST features in India is the input tax credit. ...GST Composition Scheme. SMEs with an annual turnover of up to Rs. ...
- Single Indirect Tax. GST has been introduced as a single, unified tax reform. ...Input Tax Credit System. One of the most prominent GST features in India is the input tax credit. ...GST Composition Scheme. SMEs with an annual turnover of up to Rs. ...Four-Tier Tax Structure. GST has a 4-tier tax structure of 5%, 12%, 18%, and 28%.
Answer:
GST :
Explanation:
Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer and as a destination-based tax, it is collected from point of consumption and not point of origin like previous taxes.
Three key features of GST :
1. SINGLE INDIRECT TAX
GST has been introduced as a single, unified tax reform. It has eliminated many existing indirect centre and state taxes like Central Value Added Tax, Special Additional Duty of Customs, Service Tax, and VAT and converted them into a single tax. The elimination of these indirect taxes has not only made tax compliance easier for businesses but has also helped in making many of the goods and services more affordable for the consumers.
2. INPUT TAX CREDIT SYSTEM
One of the most prominent GST features in India is the input tax credit. If a manufacturer or service provider has already paid input tax on a purchase, the same can be deducted from their total output tax liability. The input and output invoices need to match to take advantage of the tax credit. This helps in removing the cascading tax effect or the traditional ‘tax-on-tax’ regime. Moreover, it also helps in reducing tax evasion.
3. GST COMPOSITION SCHEME
SMEs with an annual turnover of up to Rs. 1 crore or Rs. 75 lakhs in specified states can also voluntarily opt for the composition scheme. With this scheme, the businesses can pay a fixed GST rate of 1% on their turnover. However, such businesses can then not use the input tax credit benefit. A business needs to select between whether they want to use the composition scheme or the input tax credit feature.
4. FOUR-TIER TAX STRUCTURE
GST has a 4-tier tax structure of 5%, 12%, 18%, and 28%. All the goods and services can only be taxed as per this tax structure. Many of the essential commodities such as food items do not have any GST. Improved transparency and cheaper goods and services are two of the biggest advantages of this 4-tier structure.
There are several GST features, and they are already working as a game-changer for the Indian economy. While it still has a long way to go, industries, consumers, and the government has already started experiencing the benefits which are expected to extend further in the future.